For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in The Charles Schwab Corporation (SCHW) ten years ago? It may not have been easy to hold on to SCHW for all that time, but if you did, how much would your investment be worth today?
The Charles Schwab Corporation's Business In-Depth
With that in mind, let's take a look at The Charles Schwab Corporation's main business drivers.
Headquartered in San Francisco, CA, The Charles Schwab Corporation is a savings and loan holding company, providing wealth management, securities brokerage, banking, asset management, custody and financial advisory services.
The company's main subsidiaries include Charles Schwab & Co. (securities broker-dealer), Charles Schwab Investment Management (an investment advisor for Schwab's proprietary mutual funds and Schwab’s exchange-traded funds) and Charles Schwab Bank (a federal savings bank).
Schwab provides financial services to individuals and institutions through two reportable segments – Investor Services and Advisor Services.
The Investor Services segment (constituting 71.8% of net revenues in 2020) includes Schwab’s retail brokerage and banking operations as well as retirement plan and corporate brokerage services. Through this segment, the company offers research, analytic tools, online portfolio planning tools, performance reports, market analysis and educational material to its clients.
The Advisor Services segment (28.2%) offers custodial, trading and support services to independent investment advisors. It also provides retirement business services to independent retirement plan advisors and record-keepers.
In May 2020, Schwab acquired certain of assets of USAA’s Investment Management Company, including brokerage and managed portfolio accounts. In June, it acquired Motif’s technology and intellectual property assets, while in July it acquired Naples, FL-based Wasmer, Schroeder & Company. In October, the company completed the buyout of TD Ameritrade, leading to the formation of a behemoth in the brokerage industry.
As of Mar 31, 2021, the company had 31.9 million active brokerage accounts, 1.6 million banking accounts and 2.1 million corporate retirement plan participants.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in The Charles Schwab Corporation ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in May 2011 would be worth $4,205.07, or a gain of 320.51%, as of May 18, 2021, according to our calculations. This return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 213.27% and the price of gold went up 19.99% over the same time frame.
Analysts are anticipating more upside for SCHW.
Schwab’s shares have outperformed the industry over the past six months. Its earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Its first-quarter 2021 results benefited from the TD Ameritrade buyout and higher market volatility. Strategic acquisitions have reinforced the company’s position as a leading brokerage player, and will be accretive to earnings. Its efficient capital deployment activities reflect a solid balance sheet position. Continued near-zero interest rates and no chance of any increase in the same in the near term remain a major concern. Also, persistently increasing costs will hurt profitability to some extent. However, offering commission-free trading has been leading to rise in client assets and brokerage accounts. This, in turn, will continue improving its trading revenues.
The stock is up 10.81% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 7 higher, for fiscal 2021. The consensus estimate has moved up as well.
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The Charles Schwab Corporation (SCHW) : Free Stock Analysis Report
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